In India this week, both Air Costa and Air Pegasus have suspended flights because of cash-flow problems. Air Costa suspended flights for 24 hours yesterday while it negotiated with Embraer and lessors over the future of its fleet of three E190 aircraft with sources stating that lease payments are well overdue on the aircraft. The three Air Costa E190s have good utilisation rates with the three between them covering some 24-28 flights a day over nine destinations. Air Costa is trying to gain additional flight permits across India but as it does so competition is heating up on what are seen as key routes. One good example of the headwinds that Air Costa and Air Pegasus face can be found by looking at the initial stages of the AirAsia India start-up, when it opened-up new regional routes and failed to stick to the main city pairs. AirAsia lost a great deal of money before it realised its mistake.
Kingfisher purchased the mighty Air Deccan and then began to transfer jets onto routes in place of turboprops resulting in the complete collapse of Air Deccan margins. Parallels could be drawn between Air Costa and Flybe since the UK regional airline put Embraer aircraft onto routes where Q400s had done very well and saw margins collapse. Maybe Air Costa needs to adjust swiftly (if possible) to an all turboprop fleet while cutting loss-making regional routes back. By gaining some significant city pairs within its Indian marketplace, the carrier could repair margins, as it will not see much help from lowering fuel prices as ATF prices in India are increasing as global jet fuel prices fall-back.
Meanwhile, Airbus has confirmed cancellations in the calendar year to the end of July 2016 for: six A320neos, 14 A320ceos (12 converted to neo), four A321ceos, 15 A321neos, seven A330-300s (converted to neos), two A350-900s and two A380-800s. Net orders during the period stand at 323 aircraft, 84 of which are confirmed as being placed by lessors giving a ratio of just over 26% of orders for Airbus coming from lessors in 2016 that we know of.